Evergreen – Bhutan’s Property Tax

Everything ages. Impermanence is universal. Yesterday’s luxury is today’s necessity and as the cliché goes, change is the only thing that is constant. But somethings always defy these universal truths. In Bhutan it is the Property Taxes, which is still based on the Taxation Policy of 1992. What has been happening? Is it because most who had the powers to alter and increase the taxes were the ones who owned land, buildings and houses? 
Similarly, what is happening? The government last year said it is working towards revising rural and urban land taxes rates along with building tax rates through a Property Tax Bill drafted by the Ministry of Finance (MoF). There are no words, even whispers about it now.
It is just unpalatable to know that building owners in Thimphu pay just Nu 100 per year as tax for a unit they own. And in most of the cases, it is deducted when the rental income is paid.
The story is the same for land, with owners of this important appreciating asset paying just 50 and 25 chetrums for commercial and residential areas, respectively. When converted to decimals, land tax per year in commercial areas of Thimphu is just Nu 21,778 per decimal and Nu 10,889 per decimal for those in residential areas.
Let’s not go into the murky discussion of how much building and house owners make in Thimphu and other urban areas, but ask ourselves one question – is this right? Is it fair?
Absolutely not, for they are the largest beneficiaries of services in towns and Thromdes. Their buildings take more water and produce more waste. Memelakha is what it is mostly because of them. And what they pay to municipalities and Thromdes are peanuts.
Bhutan’s four Thromdes depend on property taxes collected to begin a new service or improve it. How can they ensure a pot hole free road without sufficient budget? How can Thimphu become a safe city with CCTV cameras everywhere without resources? The same goes for municipalities and the local government.
Looking at what is paid today as taxes, the right of building owners to demand services could be challenged. The Asian Development Bank’s (ADB) Asian Development Outlook 2022, Mobilizing taxes for development, has pointed out Property Tax as one of the measures for growth and development. We ardently believe land and building owners will support increase of Property Tax, as deep in their hearts they know very well that what they are paying now is far too less, compared to what they earn. Many are philanthropists who support the poor. But if the government does not revise the taxes, no one will come forward saying they will pay more. And imagine how it will benefit Thromdes and others, who depend on Property Tax.
Property Tax Amendment does not sem to be an agenda of the forthcoming National Assembly session. Nonetheless, there are provisions where discussions can be held and measures implemented. 
Further, it is embarrassing to see that some of our policies are still based on laws that were made three decades back. And to quote ADB: “Tax reform to boost revenue may be politically challenging, but global experience shows that strong leadership can enable success.”